SOURCE: EURO Ressources

September 10, 2008 15:13 ET



EURO Ressources S.A. (TSX: EUR) (Paris: EUR) today announced that it has completed the liquidation of the gold hedge for the first quarter of 2009, with settlement to be made at the end of October 2008. The remaining gold hedge totals 17,100 ounces comprising three equal quarterly tranches in each of the second, third and fourth quarters of 2009.

James H. Dunnett, Directeur-Général of EURO Ressources, commented: "EURO can now benefit from three consecutive quarters of cash-flow without associated gold hedging. As at June 30, 2008 the mark-to- market negative value of our hedges was $10.86 million and had been fully accounted for: a gain of approx $2.5 million would be reflected today if the hedge were accounted for at current gold prices of around $800/ounce, including the gain on liquidation of the hedge, now announced."

Following payment by IAMGOLD in July 2008 of nearly $4.3 million in cash in respect to the second quarter royalty, EURO continues to enjoy sound liquidity, with over $1 million of cash on hand. Prior to the recently announced bid from IAMGOLD, this liquidity was expected to increase further, to in excess of $2 million during October, after scheduled debt principal repayment of $600,000 and settlement of the liquidated hedge relating to the first quarter of 2009.

Mr Dunnett added "Prior to IAMGOLD's bid, management had anticipated that this liquidity might be applied in October to fully prepay the last portion of the debt to Macquarie Bank, the remaining $666,667, which would enable the Company to operate free of loan covenants. Although Macquarie Bank has been supportive of EURO's stated policy of seeking acquisitions, being debt free would be a symbolic achievement."

The Company has recently sought to reduce its forward gold hedging position against a rising gold market, however, the recent gold price downturn has substantially increased the availability and attractiveness of potential acquisitions. Management has considered that without debt covenants EURO would be better able to pursue these opportunities.

Mr Dunnett further commented: "After nearly 4 years of striving to eliminate the debt and related gold hedging incurred as part of the Rosebel acquisition, EURO is within sight of achieving that goal. Prior to IAMGOLD's bid, and absent further liquidation of the remaining gold hedges, EURO's cash position was forecast to rise to $8 - $10 million by April 2009, after receipt of the Rosebel royalty for the first quarter of 2009, based on current gold prices.

"EURO's liquidity would be further increased if Rosebel were to achieve the higher production levels now being forecast by some analysts. Also, the arbitration hearing regarding the amounts unilaterally with-held from the Rosebel royalty by IAMGOLD is scheduled for October 9, 2008. EURO's management remains confident that the arbitrator will find for EURO and the resulting payment by IAMGOLD of amounts with-held, totalling nearly $1 million, would further augment EURO's liquidity."

The gold hedge remaining in 2009 of 17,100 ounces, represents about 60% of the recent attributable annual production on which the Rosebel royalty is payable (i.e. 40% of EURO's royalty income from Rosebel in 2009 remains unhedged on an annual basis). At the higher production levels forecast by analysts for 2009, the hedge could be less than 50% of attributable annual production, leaving more than 50% of the 2009 royalty income unhedged.

Management continues the process of evaluating the Company's response to IAMGOLD's proposed offer and to consider alternative transactions. Shareholders are advised to await the Board's formal recommendation before taking any action in respect to their shares in EURO.

About EURO

EURO is a French company, focused on owning royalties and similar interests on operating gold mines. EURO also holds certain gold mineral rights in French Guiana including Paul Isnard which comprises 8 concessions and a PER over 140 sq. km.

EURO has approximately 60.6 million shares outstanding.

Statements Regarding Forward-Looking Information: Some statements in this news release are forward-looking statements. Investors are cautioned that forward-looking statements are inherently uncertain and involve risks and uncertainties. Such statements include comments regarding the Company's intentions with respect to a reduction of its hedge position and EURO's intentions with respect to IAMGOLD Corporation. There can be no assurance that future developments affecting the Company will be those anticipated by management.

Not for distribution to United States newswire services or for dissemination in the United States. The securities referred to herein have not been registered under the US Securities Act of 1933 and may not be offered or sold in the United States or to a US person absent registration or an applicable exemption from registration.

This information is provided by HUGIN

Contact Information

  • Additional information relating to EURO Ressources S.A. is
    available on SEDAR at Further requests for
    information should be addressed to:

    James H. Dunnett
    Tél.: +1 604 710 2242
    Email : Email Contact

    Susanne A. Hermans
    Vice-President Finance
    Tél.: +1 303 204 7771
    Email : Email Contact